S.I. No. 191/1990 - Insurance (Bonding of Intermediaries) Regulations, 1990.

S.I. No. 191 of 1990.

INSURANCE (BONDING OF INTERMEDIARIES) REGULATIONS, 1990.

I, DESMOND O'MALLEY, Minister for Industry and Commerce, in exercise of the powers conferred on me by sections 5 and 47 of the Insurance Act. 1989 (No. 3 of 1989), hereby make the following regulations:

1. These Regulations may be cited as the Insurance (Bonding of Intermediaries) Regulations, 1990, and shall come into operation on the first day of October, 1990.

2. In these Regulations—

"accounting year" has the same meaning as it has in section 47 of the Act of 1989;

"the Act of 1989" means the Insurance Act, 1989 (No. 3 of 1989);

"the bond" means the bond to be effected by an insurance intermediary under section 47 of the Act of 1989 and references to "bond" shall be construed accordingly;

"insurance company" means an insurance company authorised under the European Communities (Non-Life Insurance) Regulations, 1976 ( S.I. No. 115 of 1976 ), to carry on business of the type referred to in Class 15 of Schedule 2 thereto;

"insurance intermediary" has the same meaning as it has in the Act of 1989.

3. (1) The bond shall be effected in either of the following ways:

( a ) by the provision by an insurance company of a bond in the form set out in the First Schedule to these Regulations, or

( b ) by the provision of a bond consisting of—

(i) a personal bond of the insurance intermediary, and

(ii) a guarantee in respect of his obligations thereunder by one of the persons referred to in paragraph (2) of this Regulation,

in the form set out in the Second Schedule to these Regulations.

(2) The persons which may provide the guarantee referred to in subparagraph (b) (ii) of paragraph (1) of this Regulation are:

( a ) a holder of a licence under section 9 of the Central Bank Act, 1971 (No. 24 of 1971);

( b ) a building society within the meaning of the Building Societies Act, 1989 (No. 17 of 1989), which is entitled under the provisions of that Act to provide such a guarantee;

( c ) the Industrial Credit Corporation public limited company;

( d ) a trustee savings bank within the meaning of the Trustee Savings Banks Act, 1989 (No. 21 of 1989), which is entitled under the provisions of that Act to provide such a guarantee; and

( e ) any other person which the Minister for Industry and Commerce may from time to time direct as being fit and suitable to provide such a guarantee.

(3) Subsection (1), (2) (a), (2) (b) or (3) (as may be appropriate) of section 47 of the Act of 1989 shall apply with regard to the sum required to be specified (by way of the value of the bond) in either of the forms of bond referred to in paragraph (1) of this Regulation.

(4) The period of validity of the bond required to be specified in either of the forms of bond referred to in paragraph (1) of this Regulation shall be 12 months save that, where in accordance with section 47 (1) of the Act of 1989, the bond is required to be effected at any time in the first accounting year, the period to be specified shall be the remainder of that year expressed in the number of months or days or both (as the case may be) that that period comprises.

4. (1) Any demand the making of which is provided for under either of the forms referred to in Regulation 3 (1) of these Regulations in respect of the sum of money to be made available under the bond or (as the case may be) the guarantee provided in respect of the bond shall be in writing and shall, subject to paragraph (2) of this Regulation, be made on the person providing the bond or (as the case may be) the guarantor during the period of validity of the bond.

(2) Notwithstanding paragraph (1) of this Regulation, where a new bond is not effected immediately on the expiry of the bond, any demand referred to in that paragraph may be made on the person providing the bond or (as the case may be) the guarantor at any time before whichever of the following happens first:

( a ) the effecting of a new bond by the insurance intermediary, or

( b ) the lapse of six months from the date of expiry of the bond.

(3) Paragraph (2) of this Regulation shall not be construed as requiring any sum of money to be made available under a bond which has expired or (as the case may be) the guarantee provided in respect of it as respects any inability or failure of the insurance intermediary that arises after the expiry of the bond to meet his financial obligations in relation to any sum of money received by him from, or on behalf of, his clients before, on or after such expiry.

5. Where the losses or liabilities incurred by clients of the insurance intermediary (being losses or liabilities in respect of which the sum of money to be made available under the bond may be applied for the benefit of those clients) exceed the value of the bond, the sum of money to be applied under the bond for the benefit of each client shall be in proportion to the amount of the loss or liability incurred by the client.

6. (1) The insurance intermediary shall cause to be displayed a copy of the bond in a prominent position in all premises occupied by him and in which he carries on business as insurance intermediary,

(2) The insurance intermediary shall ensure that in his sales literature and notepaper relating to his business as insurance intermediary mention is made of the fact that a bond required by the Act of 1989 is in existence in respect of his business as insurance intermediary.

Regulation 3

FIRST SCHEDULE.

FORM OF BOND SECURED BY AN INSURANCE INTERMEDIARY WITH AN INSURANCE COMPANY

Insurance Act, 1989 — Sections 5 and 47 Insurance (Bonding of Intermediaries) Regulations, 1990.

Bond secured by this Broker/Agent with Insurance Company in accordance with the above Statutory Provisions and Regulations.

1. We, (name of Insurance Company ............................................................ .........), hereinafter in this Bond referred to as "the Surety", having our registered Office at ............................................... , at the behest of (name of Insurance Intermediary ...................................................) hereinafter in this Bond referred to as "the Insurance Intermediary", of (address of Insurance Intermediary's principal place of business ............................................................ ............................................................ .......) hereby undertake and acknowledge ourselves bound to make available to the person nominated or approved of by the Minister for Industry and Commerce, hereinafter in this Bond referred to respectively as "the Nominee" and "the Minister", such sum of money as the Nominee may demand in accordance with clause 3 of this Bond but not exceeding IR£ (value of the Bond) to be applied in accordance with clause 4 of this Bond.

2. This Bond shall be valid for .............. month/months, ........ day/days, commencing on the ......... day of ............................... (month and year) and expiring on the ............... day of .......................... (month and year).

3. IT IS AGREED that where during the period of validity of this Bond or any previous bond effected by the Insurance Intermediary under the Insurance (Bonding of Intermediaries) Regulations, 1990, hereinafter in this Bond referred to as "the Regulations", there is or has been an inability or failure on the part of the Insurance Intermediary to meet his financial obligations in relation to any sums of money received by him from, or on behalf of, his clients during such period, the Surety will make available the sum of money referred to in clause 1 of this Bond upon demand being made on him in respect thereof by the Nominee in accordance with Regulation 4 of the Regulations.

4. (1) Any sum of money made available to the Nominee under this Bond shall be applied by the Nominee—

( a ) subject to subclause (2) of this clause, for the benefit of any client of the Insurance Intermediary who has incurred loss or liability because of the inability or failure of the Insurance Intermediary to meet his financial obligations in relation to any sums of money received by him from, or on behalf of, that client; and

( b ) to indemnify, with the consent of the Minister and up to such sum as may be specified by the Minister, the Nominee in respect of such reasonable expenses as are incurred in carrying out the functions referred to in paragraph (a) of this subclause.

(2) Subclause (1) (a) of this clause shall not apply to any sum of money as is referred to therein where any proceeds of a previous bond effected under the Regulations (including, as the case may be, any proceeds of the guarantee provided in respect of it) have been applied for the benefit of the client referred to in the said subclause (1) (a) with respect to the said sum of money.

5. IT IS A CONDITION of this Bond that the Nominee will repay to the Surety such part of any sum of money made available to the Nominee under clause 3 of this Bond as shall not be expended for the purposes mentioned in paragraph (a) or (b) of clause 4 (1) of this Bond.

6. The Surety undertakes—

( a ) to issue to the Insurance Intermediary a certified copy of this Bond, and

( b ) in the event of the Insurance Intermediary, on the expiry of this Bond, not effecting a new bond with the Surety, to notify the Minister in writing of that fact not later than seven days after such expiry (without assuming any duty of care to the Nominee or clients of the Insurance Intermediary to ensure that the Minister is so notified).

SIGNED BY (signature of an officer of Insurance Company together with seal of the Insurance Company).

FOR AND ON BEHALF OF (Name of Insurance Company).

Dated this .................. day of ............................................ (month and year).

Regulation 3

SECOND SCHEDULE

FORM OF BOND CONSISTING OF PERSONAL BOND OF INSURANCE INTERMEDIARY AND GUARANTEE IN RESPECT OF HIS OBLIGATIONS THEREUNDER.

Insurance Act, 1989 — Sections 5 and 47 Insurance (Bonding of Intermediaries) Regulations, 1990.

Personal Bond of this Broker/Agent with guarantee in respect of my/our obligations thereunder provided in accordance with the above statutory provisions and regulations.

1. I/We, (name of Insurance Intermediary ........................................................ ), hereinafter in this Bond referred to as "the Insurance Intermediary", of (address of Insurance Intermediary's principal place of business ........................................) hereby undertake and acknowledge myself/ourselves bound to make available to the person nominated or approved of by the Minister for Industry and Commerce, hereinafter in this Bond referred to respectively as "the Nominee" and "the Minister", such sum of money as the Nominee may demand in accordance with clause 3 of this Bond but not exceeding IR£ ............... (value of Bond) to be applied in accordance with clause 4 of this Bond.

2. This Bond shall be valid for ............ month/months, ............ day/days, commencing on the ............... day of ................................... (month and year) and expiring on the .......... day of ......................................... (month and year).

3. IT IS AGREED that where during the period of validity of this Bond or any previous bond effected by the Insurance Intermediary under the Insurance (Bonding of Intermediaries) Regulations, 1990, hereinafter in this Bond referred to as "the Regulations", there is or has been an inability or failure on the part of the Insurance Intermediary to meet his financial obligations in relation to any sums of money received by him from, or on behalf of, his clients during such period, the Insurance Intermediary will make available the sum of money referred to in clause 1 of this Bond upon demand being made on him in respect thereof by the Nominee in accordance with Regulation 4 of the Regulations.

4. (1) Any sum of money made available to the Nominee under this Bond shall be applied by the Nominee—

( a ) subject to subclause (2) of this clause, for the benefit of any client of the Insurance Intermediary who has incurred loss or liability because of the inability or failure of the Insurance Intermediary to meet his financial obligations in relation to any sums of money received by him from, or on behalf of, that client; and

( b ) to indemnify, with the consent of the Minister and up to such sum as may be specified by the Minister, the Nominee in respect of such reasonable expenses as are incurred in carrying out the functions referred to in paragraph (a) of this subclause.

(2) Subclause (1) ( a ) of this clause shall not apply to any sum of money as is referred to therein where any proceeds of a previous bond effected under the Regulations (including, as the case may be, any proceeds of the guarantee provided in respect of it) have been applied for the benefit of the client referred to in the said subclause (1) (a) with respect to the said sum of money.

5. IT IS A CONDITION of this Bond that the Nominee will repay to the Insurance Intermediary such part of any sum of money made available to the Nominee under clause 3 of this Bond as shall not be expended for the purposes mentioned in paragraph (a) or (b) of clause 4 (1) of this Bond.

Guarantee in respect of insurance intermediary's obligations under foregoing clauses.

6. We, (name of person providing guarantee ............................................ ), hereinafter in this Bond referred to as "the Guarantor", having our registered office at ................................................, at the behest of the Insurance Intermediary, hereby guarantee that there will be made available by the Insurance Intermediary the sum of money referred to in clause 1 of this Bond upon demand being made on the Insurance Intermediary in respect thereof in accordance with clause 3 of this Bond.

7. Any demand under the foregoing guarantee shall be made on the Guarantor by the Nominee in accordance with Regulation 4 of the Regulations.

8. Clause 4 of this Bond shall apply to the application of any sum of money made available under the foregoing guarantee to the Nominee.

9. IT IS A CONDITION of the foregoing guarantee that the Nominee will repay to the Guarantor such part of any sum of money made available to the Nominee under the guarantee as shall not be expended for the purposes mentioned in paragraph (a) or (b) of clause 4 (1) of this Bond.

10. The Guarantor undertakes—

( a ) to issue to the Insurance Intermediary a certified copy of this Bond, and

( b ) in the event of the Insurance Intermediary, on the expiry of this Bond, not presenting a new bond to the Guarantor for the purpose of securing a guarantee in respect of his obligations thereunder, to notify the Minister in writing of that fact not later than seven days after such expiry (without assuming any duty of care to the Nominee or clients of the Insurance Intermediary to ensure that the Minister is so notified).

SIGNED BY (signature of Insurance Intermediary or member of his firm, or where Insurance Intermediary is a registered company, signature of an officer of the company together with seal of the company)

FOR AND ON BEHALF OF (name of Insurance Intermediary)

Dated this ................. day of ............................................................ ., (month and year)

SIGNED BY (signature of an officer of Guarantor together with seal of the Guarantor)

FOR AND ON BEHALF OF (name of Guarantor)

Dated this ............... day of ............................................................ ...., (month and year)

GIVEN under my Official Seal, this 23rd day of July, 1990.

DESMOND O'MALLEY,

Minister for Industry and Commmerce.

EXPLANATORY NOTE

These Regulations specify the form of bond to be used by insurance brokers/agents pursuant to Section 47 of the Insurance Act, 1989 (No. 3 of 1989). The Regulations will come into effect on 1 October, 1990.